MIAMI—Various factors impact vacancy rates in South Florida. But a new CBRE research report is pointing to one that may not be top of mind for most brokers: for-profit campus downsizing.
At issue are proposed federal regulations that aim to strengthen student outcomes at for-profit schools. CBRE is predicting these regulations could impact office space absorption and vacancy rates in some Florida commercial real estate markets. In fact, according to CBRE, at least three major institutions have reduced their office footprint since the new school performance mandates were proposed in 2011.
“Under the proposed regulations, for-profit colleges that do not adequately prepare graduates for employment could lose access to federal student aid,” says Quinn Eddins, CBRE Florida's director of research and analysis. “This aid accounts for the majority of revenue for for-profit colleges.”
The US Department of Education first proposed the regulations in 2011. Since then, one for-profit college vacated about 46,000 square feet in Boca Raton, consolidated operations at locations in Fort Lauderdale, Cypress Creek, and Plantation, and stopped enrolling new students in Jacksonville.
But that's not the only marker CBRE is pointing to. Another for-profit college consolidated its space in Fort Lauderdale in 2013. And another large for-profit institution vacated 15,000 square feet in Daytona and ended a lease early in Palm Beach Gardens.
“For-profit schools occupy more than 4 million square feet of space in Florida, mostly concentrated in a handful of cities, and any downsizing by these organizations could have an impact on the state's real estate markets,” Eddins says. For-profit colleges currently occupy more than 100,000 square feet in each of the Fort Lauderdale, Miramar, Miami, Orlando, Tampa, and Jacksonville office markets.
What's the bottom line? CBRE suggest that the coinciding financial impact on multiple colleges has the potential to cause declines in the relevant markets' positive net office absorption levels once the regulations take effect.
What are your thoughts on the issue?
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